Compass Point analyst Merrill Ross, who previously downgraded Innovative Industrial Properties (IIPR) to Neutral from Buy with a price target of $78 on December 20 after the company reported a financial default by PharmaCann on all leases, explaining that the order of magnitude of the cross-default triggered the company's downgrade and price target breach as the company at the time did not know if PharmaCann was “on the brink, or if this was an isolated incident.” The company now thinks that this default was a negotiating tactic on the part of both parties and that PharmaCann just wanted to leave its lease in Warren, arguing that Innovative Industrial is “playing a big stick in the cross-default provision.” However, the company also thinks the “clock is ticking for both companies,” because PharmaCann cannot afford to be evicted from the other five growing facilities and Innovative's critical negotiation “calls for creativity” as he cannot afford to fail to collect 17% of his growing facilities. revenue for any period of time and still maintain the dividend. The company added that it needs to see “light at the end of the tunnel before we can find a price point where IIPR stock represents a buying opportunity.”
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